This proxy season, executives and directors need to toot company horns.
By Eve Tahmincioglu
Investors are increasing the pressure on executives and directors on a host of issues, including getting more diversity in the boardroom, taking climate risk seriously, and installing directors with expertise needed to compete in a fast-changing global market.
Some boards are already addressing many of these issues, but is the word getting out?
Not in an efficient way, maintains Kellie Huennekens, associate director of EY Center for Board Matters.
The center’s disclosure analysis, she says, found more disclosure in press releases around the time of board appointments than in proxy statements.
“There’s an appetite in the market for company specific disclosure that communicates what boards are doing to the broader investor audience, and goes beyond what is required disclosure,” she says.
Particular items that boards should concentrate are include the following list, for the center’s just released Proxy Season Preview: (The preview includes data from interviews with more than 60 institutional investors representing $32 trillion in assets under management.)
- Board composition, with a particular focus on enhanced diversity
- Board-level expertise that is more aligned with business goals
- Increased attention to climate risk and the environment
- Enhanced attention to talent and human capital management
- Compensation that is more aligned with performance and strategy
If boards are already addressing these issues, Huennekens says, it’s time for “enhanced communication at a very fundamental level.”
Boards, she continues, can share what their governance priorities are. “Given resources are tight, to some extent that can be addressed through company specific disclosures that provide investors with insights as to how the company and board are robustly proactively and actively addressing these topics.”